linkedin stock price before microsoft offer

Linkedin stock price before microsoft offer how to#
Linkedin stock price before microsoft offer software#
Linkedin stock price before microsoft offer professional#

Perhaps, but that’s assuming Microsoft produces novel insights, which is a big if. Microsoft’s chief financial officer, Amy Hood, made the economic argument that Office will see higher revenue per user as each user sees greater value. The combination of all those things will create something greater than the sum of its two parts. What’s a graph? Picture a web of connections between you and all the documents you write in Word, say, and all the people on LinkedIn who connect to you. He told the Street last week that combining LinkedIn’s 433 million registered users with the 1.2 billion people using Microsoft’s Office productivity suite and the 70 million people who use the online version, Office 365, will result in a “rich information graph.” We also don’t yet know what the goodwill will be for this deal we only have Nadella’s explanation for what the value is supposed to be. Microsoft shares ended the week down almost that much-2.6%-at Friday’s close of $50.13. One of the sternest cautionary notes was sounded by Citigroup’s Walter Pritchard, who wrote that “we see strategic rationale, but not $26 billion worth.” In his view, the deal actually reduces Microsoft’s value by 3% after counting the financial synergies of the deal relative to its costs. Given Microsoft’s checkered M&A history, not everyone’s convinced the company has that good reason. There’s still got to be a good reason to do it.

Linkedin stock price before microsoft offer professional#

“No other network or data source has the magnitude of high-quality, detailed data on individuals’ professional interests and attributes,” he wrote.Īll true, but whether a deal is pricey or bon marché isn’t really the point. In Moerdler’s view, LinkedIn-with a relatively high revenue growth rate and a high gross-profit margin equivalent to 86% of sales-is a premium asset worth a premium price. The deal price brings that to 6.7 times, low compared to For example, before the deal, LinkedIn traded for just four times its projected revenue for the next 12 months, as a ratio of its enterprise value, which balances cash and debt, divided by projected sales. Bernstein’s Mark Moerdler, argued that the deal isn’t pricey at all, given that LinkedIn stock was trading at a 41% discount to peers in cloud computing and the Internet. And most expect LinkedIn’s losses will have only a minimal impact on Microsoft’s expected profit after the deal closes.

Linkedin stock price before microsoft offer how to#

How to Profit From Brexit: A Leveraged Gold Tradesīut that growth rate compares to a projected 2% decline in Microsoft’s revenue in the fiscal year ending this month. Revenue growth was 35% last year, and is projected at 25% this year and 20% in 2017.Ħ Stocks With ‘Massive Competitive Advantages’sįed Acknowledges Reality: Rates Are Going Nowhere Sure, everyone knows LinkedIn’s growth is slowing, making it potentially a declining asset. The immediate reaction when the deal was announced last Monday morning was shock and awe because Microsoft is paying 20 times projected earnings before interest, taxes, depreciation, and amortization next year, on a non-GAAP basis.Īlthough that earnings multiple is substantial, many argued that the price doesn’t look so bad by other measures. And the company also makes money selling online advertising.

Linkedin stock price before microsoft offer software#

The largest portion of its revenue comes from selling software that lets companies peruse profiles as they prospect for employees or customers.

LinkedIn makes money when people want to promote themselves, to, say, get a new job. Those are the relationships Nadella enthuses over. The company lets people post a profile of themselves, including their résumé and work history. They generated a whopping 45 billion page views. YOU MAY NOT USE LINKEDIN, but 106 million people did last quarter, out of a total of 433 million registered users. The deal probably bakes in some degree of wishful thinking on Nadella’s part, and that should give investors pause. Microsoft has had a troubled history with large deals, so this tech mergers-and-acquisitions event evokes particular scrutiny. The bigger question around the deal is what were Microsoft’s expectations when it agreed to add a 50% premium to LinkedIn’s share price? Microsoft Chief Executive Satya Nadella insists that his company can make LinkedIn’s so-called graph of relationship between professionals-its ability to reveal ties between people-more valuable through technologies such as machine learning.īut this is Microsoft, which last year wrote down $7.6 billion in goodwill for its purchase of the mobile-phone unit of